Darcy Burner, 8th District Congressional candidate released the following statement regarding the proposed government bailout of Wall Street:
“Over the past decade, with the removal of protections that had been in place since the Great Depression, we abandoned all checks on bad behavior by banks. As a result, we face a financial crisis of historic magnitude. It should never have come to this.
“The Bush administration and its Republican allies enabled, encouraged and ignored the bad behavior on Wall Street that created this mess. Now they say that that without the largest taxpayer-funded bailout in human history – at a cost of more than $2,000 for every man, woman, and child in the United States – our economy is at risk of collapse.
“If we are going to bail out Wall Street to the tune of $700 billion or more, then taxpayers must get significant reforms and real protections in return. Congress needs to take the time to get this right. They should move forward in a calm and orderly way, and not be stampeded into endorsing a bad deal. First and foremost, we must not just hand over a blank check to an administration and a financial sector that has failed us. Again: no blank check.
“Instead, let’s put in place reforms with real teeth. Any bailout plan must include provisions that address the following points:
1. We must protect taxpayers.
a. The financial institutions that made the poor decisions that created this mess should bear as much of the cost of their mistakes as possible, and taxpayers should be given a stake in the bailed out firms in proportion to the size of the bailout they receive. When these companies return to profitability, taxpayers must be able to recoup some or all of their investment.
b. The financial institutions must be held accountable for accurately representing the quality of the assets they’re unloading so that they cannot game the system. Mechanisms could easily be put into place to ensure that companies and their executives who misrepresent the quality of the assets they sell to the government are held accountable if those assets turn out to be of significantly inferior quality.
c. People who chose irresponsible risk should have prime responsibility for paying for the consequences of that risk. That means, for instance, that creditors of the financial institutions who made loans bearing especially high rates of return in the days leading up to the crisis should not necessarily recover all of their money at taxpayer expense.
2. We must not reward bad behavior. Any firm that takes advantage of the bailout must accept restrictions on out of control CEO pay. The taxpayers should not be on the hook for golden parachutes for failed executives – they have a right to know that the money they are handing over will not disappear into the pockets of the same people who created this mess in the first place.
3. We must help communities, and work to protect the value of the assets taxpayers are acquiring. If Wall Street deserves generous government assistance, then Main Street deserves a little help too. If we are acquiring sub-prime mortgages, the homes that provide the collateral for those loans retain more value if they are occupied than if they are abandoned. In addition, the blight of homes abandoned because of unrealistic mortgages drags down not only the homeowners in question, but whole neighborhoods and communities. Homeowners with delinquent mortgages should be offered renegotiated mortgages that will give them greater opportunity to stay in their homes.
4. We need accountability. Congress must have explicit oversight of bailout efforts. No unelected member of the administration should have sole authority over so much of the taxpayer’s money.
“If Congress implements these sorts of taxpayer protections, this bailout could end up having a positive effect on our economy in the longer term as transparency and accountability are restored and sensible regulation puts our economy back on a sustainable track. But let’s be clear: this is a sad moment for America. Our economy is likely to sink sharply lower now for a time. As a result, thousands of Americans will lose their jobs through no fault of their own. Trillions in wealth held by ordinary people in the form of home value and investment value will be erased. Let’s make sure we take the appropriate actions now so this never happens again.
“And finally, while this crisis is not a time for excessive partisanship, I would point out that Congressman Reichert and I have a basic philosophical difference on these issues. Time and again, Congressman Reichert has supported the economic policies of the Bush administration that have put us in this mess. For instance, he voted for the misconceived 2005 Bush Bankruptcy Bill that, as BusinessWeek pointed out last year, is a major factor in driving up the foreclosure rate and has made the housing slump worse, thus contributing to our current difficulties.
“We need change, not more of the same. We need a government that stops focusing on showering favors on the wealthy and powerful corporations, and instead does its job by protecting the interests of the people of this country. I will be that sort of representative.”
